Starbucks Sues Exec for Joining Dunkin' Donuts

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Sat, 07/31/2010 - 00:10

Starbucks is suing a former executive for taking a job at archrival Dunkin' Donuts. Upon learning that Paul Twohig accepted a position at Dunkin' Donuts as its new brand operations officer on Oct. 3, Starbucks filed suit claiming he violated an 18-month non-compete agreement.

Starbucks is concerned with the fact that part of Twohig’s role, as its svp overseeing thousands of stores in the Southeast, was to formulate business strategies that would respond to competitors including Dunkin' Donuts. Twohig left Starbucks in March.

"Starbucks has a well-grounded fear of the immediate invasion of its rights," reads the complaint filed Oct. 5 at the district court in Seattle. "The harm to Starbucks will be difficult to directly ascertain and may well be irreparable. The balance of harm tips sharply in favor of Starbucks in this case." [Include PDF here]

As evidence of the company's intent to steal Starbucks customers, the coffee giant pointed to the www.dunkinbeatsstarbucks.com in its complaint. The Web site promotes a blind taste test between Dunkin' and Starbucks,

"We are hopeful that Dunkin' Donuts and Mr. Twohig will unwind this situation," said Starbuck's company spokesperson. "We are open to hearing from both parties to resolve the situation in a way that protects Starbucks’ interests."

Dunkin said in a statement: "Dunkin' Brands is not party to any lawsuit with Starbucks. Certainly we are aware of the situation, but we do not feel it is appropriate to comment."

Twohig could not be reached for comment.

This lawsuit comes at a time when Starbucks is trying to defend its position in the coffee market. The company recently introduced its own instant coffee line and earlier this year began promoting combination meals similar to those seen at Dunkin' Donuts and McDonald's.

Regardless of who was at fault, the suit could net Starbucks some bad publicity, said Robert Passikoff, president of New York-based Brand Keys. "It still looks like the big guy picking on the little guy, and if we've learned anything in branding or politics, it's that Americans don’t like a bully."